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For a while it seemed like a month wouldn&#8217-t pass without hearing of a new record-breaking art auction, along with the inevitable insinuations of a &#8220-bubble&#8221-. Last night the buyers blinked, as a Van Gogh work expected to command $28-35 million did not get any bids.

People talk about art as an asset class and yet there is no way to sell it short or hedge against declines in value. Clearly, prediction markets are an answer. It seems like this would be a good niche market for a real-money exchange. Markets could either be tied to upcoming auctions or, more likely, an art price index. The latter would allow any art owner a hedge with basis risk.

This, by the way, is not to imply that art prices are about to collapse. There is some evidence that they trail housing prices with a lag of a year or two, but this is mainly anecdotal to the late &#8217-80s / early &#8217-90s period. It is more likely that the location of demand is shifting.

Exchanges that are fortunate enough to be operating in modern legal and regulatory regimes show a somewhat limited imagination in their offerings. There are opportunities in the current re-shaping of how art is priced and artists are rewarded.